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Salt Lake City Olympics Bribery and Bigtown

You work for the city of Bigtown's legal department. Bigtown has been trying for years to attract more convention business, but it has been unsuccessful to date. The new mayor was voted in on the tagline, "I'll make Bigtown the place to see and be seen."

It's been six months since the mayor's inauguration, but tourism is, if anything, worse than before. The mayor is desperate and talking about offering contracts for city work in exchange for convention business. Your boss (the city's counsel) needs to convince the mayor that this strategy is unethical and possibly illegal. She asks you to research the Salt Lake City Olympics scandal and address specific issues that link to Bigtown's situation.

The Big Business of the Olympics and Bribery

LEAD STORY-DATELINE: The Washington Post, January 15, 1999.

Salt Lake City and the state of Utah are considered synonymous with the Mormon Church and the morality that flows from religious pursuits. A recent bribery scandal relating to Salt Lake City's successful bid to host the 2002 Winter Olympics casts a cloud over the city and state.
Research the Salt Lake City Olympics scandal and address specific issues that link to Bigtown's situation. Prepare a presentation for your boss to give to the mayor answering the 4 questions below.

The Salt Lake Organizing Committee (SLOC) had assigned individual members to lobby members of the International Olympics Committee (IOC) to select Salt Lake City as the 2002 Winter Olympics' site. Since November 1998, there have been allegations that the members of the SLOC lobbied by making gifts to certain influential IOC members and their families. The allegations are that the SLOC members gave scholarships, free medical care, guns and other expensive gifts valued at hundreds of thousands of dollars to visiting IOC members. IOC rules limit members to gifts with a maximum value of $150. One influential IOC member is alleged to have received free medical treatment for hepatitis and financed land investment deals for one SLOC member.

The scandal has resulted in investigations by a several agencies, including the federal Department of Justice, the International Olympics Committee, the U.S. Olympic Committee, and an ethics panel for Salt Lake Organizing Committee (SLOC). The Utah legislature had created a committee to oversee the Olympics because of the approximately $1.4 billion initial costs to be incurred by Utah and the State's obligation to pay any shortfall. That committee has entered the fray and demanded financial accounting from the SLOC. The state of Utah projected receipt of three billion dollars in revenues from hosting the games.

IOC members investigating the scandal have said that punishment may range from requiring an apology to censure to expulsion depending on the results of its investigation. Several SLOC members including president Frank Joklik and vice president Dave Johnson, resigned (during the investigation process).

Assignment:

Part A - Research the Salt Lake City Olympics scandal and address specific issues that link to Bigtown's situation.
Part B - Prepare a presentation for your boss to give to the mayor answering the questions below.

1. Lobbying is defined as "the act of trying to directly shape or influence a government official's understanding and position on a public policy issue." (Post, Business and Society 7th ed.) What is the difference between lobbying and bribery?

2. Should bribery be considered unethical or illegal has been debated extensively. Many scholars and businesspeople take the position that bribery should not be treated as unethical. Why is it that the general public considers bribery to be immoral? Use ethical theories or philosophies to explain your answer.

3. The Foreign Corrupt Practices Act (15 U.S.C. sec. 78) makes it illegal for US companies to pay bribes even if they are in foreign countries. Assuming that this is a case where the FCPA would apply, it helps to look at its definition of a bribe. The FCPA defines a payment that is "meant to influence an official to award or maintain business activity" as illegal. Payments that assist the payer to obtain ministerial actions are not prohibited. What argument could the SLOC members make that the payments made do not fit the definition of an illegal bribe under the
FCPA?

4. What is the appropriate punishment for violation of ethical and legal principles? Should the remedies be limited to expulsion of the members who violated those principles or should the entire community be held responsible? Use ethical principles or theories to answer this question.

Solution Preview

UPDATED INFORMATION DECEMBER 13, 2008 (AS SOME OF THE LINKS IN THE ATTACHED RESPONSE ARE NO LONGER ACTIVE)
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The mayor is desperate and talking about offering contracts for city work in exchange for convention business. The city's counsel needs to convince the mayor that this strategy is unethical and possibly illegal. You are asked to research the Salt Lake City Olympics scandal drawing parallels to the Bigtown's situation.

1. Lobbying is defined as "the act of trying to directly shape or influence a government official's understanding and position on a public policy issue." (Post, Business and Society 7th ed.) What is the difference between lobbying and bribery?

Lobbying is considered legal, whereas bribery is not.

The difference is matter of intent (the intent of lobbying is considered to be in the best interest of society and thus, considered ethical and legal), whereas bribery involves intent to gain an illicit advantage.

Bribery is "the practice by which a person who can take decision or action on behalf of others by virtue of his authority or position is influenced by paying or offering monetary benefits for influencing him to take an action or decision which he would not have done otherwise. Eg. Offering money to the police officer to record a wrong verification report. Bribery is considered unlawful because it puts one party at an unfair advantage over other parties" (http://www.legal-explanations.com/definitions/bribery.htm).
- Bribery is the practice of offering professional money or other favors in order to circumvent ethics in a variety of professions. It is a form of corruption and is generally illegal, or at least cause for penalties from professional organisations.
en.wikipedia.org/wiki/Bribery
- Offering or promising anything of value with intent to unlawfully influence a public official, bank employee, officer or employee of the Government, witness, or any common carrier as well as soliciting or accepting such an offer. Soliciting or receiving anything of value in consideration of aiding a person to obtain employment in the US Government. Receiving or soliciting any remuneration, directly or indirectly, in cash or in kind in return for purchasing, ordering, leasing, or recommending to purchase any good, service, or facility.www.albany.edu/sourcebook/app11.html

Bribery is the payment or acceptance of money or gifts that could be construed as an attempt to induce a person to use his or her influence to do the following is prohibited:
- assist the Company in obtaining or retaining business
- benefit the Company
- benefit an individual

Although bribing government officials is an accepted practice in some countries, such activity is in violation of Company policy and is also outlawed by state and federal laws, including the U.S. Foreign Corrupt Practices Act of 1977 (the "FCPA").The FCPA defines a payment that is "meant to influence an official to award or maintain business activity" as illegal. (http://www.bjservices.com/website/EthMan.nsf/ff5391172ea3b3d3072563b3006bcdaa/97e522aa28fd39b186256c48006c25da?OpenDocument).

In the Salt Lake City scandal, since the the lobbying way exceeded the allowed amount ($150.00), it was considered bribery or the buying of votes to put at an advantage over everyone else in order for Salt Lake to be the 2002 Winter Olympics' site. People were charged with bribery (see This is therefore bribery, as it puts Salt Lake city at an unfair advantage, assuming that the other cities/locations did not exceed the allowed gift amount of $150.00.

2. Whether bribery should be considered unethical or illegal has been debated extensively. Many scholars and businesspeople take the position that bribery should not be treated as unethical. Why is it that the general public considers bribery to be immoral? Use ethical theories or philosophies to explain your answer.

In the attached response, the links are no longer active.

The general public considerS bribery to be immoral, which can be explained by applying the Utilitarian approach of ethics. Utilitarianism requires us to maximize the good of many, even if it means doing an injustice to some individuals. From the Utilitarian approach, bribery should be treated as unethical because it hurts more people than it helps. It puts everyone at a disadvantage except the person or company making and benefiting from the bribe.

Respect for the individual, on the other hand, ...

Solution Summary

This posting discusses the illegal plans of Bigtown to attract more convention business and explores parallels with the Olympics bribery scandal of 1999. Approximately 2,843 words with references.

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